Although numerous literatures have indicated that managing IT investment initiatives successfully is a necessary condition for generating maximum value from the IT assets that results from the investments or for using the resulting IT assets to create enterprise value. According to Peter Weill and Jeanne W. Ross, in IT Governance, ‘The companies that manage their IT investments most successfully generate returns that are as much as 40% higher than those of their competitors.’[1] Yet, only 32% of enterprise IT investment initiatives/projects succeeds, according to the Standish Group Chaos report.[2]
Five (5) explanations was given to explain the reasons why private, public, and not-for-profit enterprises are not able to manage their IT investments initiatives successfully, and subsequently generate maximum value from those investments..
Explanation 1: Successful Enterprises Govern IT Investments Better
The availability of effective IT governance architecture or mechanisms is the first explanation that was given for why some enterprises succeed in managing their IT investments, and subsequently generate maximum enterprise (business/organisation) value. In a study of 250 private/profit-making and public/non-profit enterprises, the duo of Peter Weill and Jeanne W. Ross, in IT Governance, found that ‘top-performing enterprises governed IT differently than did other enterprises.’ [3] The duo also found that, enterprises that have effective IT governance architecture/design achieve greater results from their investments in IT than those that did not, which led them ‘to conclude that effective IT governance is the single most important predictor of the value that an organisation can generates from IT.’[4]
Explanation 2: Successful Enterprises Are More Adept at Formulating IT Strategies and Designing Solution Architectures
The second explanation that was given to explain why some enterprises are able to successfully manage their IT investments and generate maximum value, while others are less successful and generate minimal value or no value at all, is that, successful enterprises are better able to formulate good IT strategies. This implies that, successful enterprises are more capable of formulating IT strategies that are aligned with their enterprise (business/organisation) strategies. Which also implies that, successful enterprises are more capable of specifying objectives for IT to achieve in order to contribute to the execution of their enterprise strategies, and in, identifying the right IT investment initiatives (prospective investment programmes/projects) that should be executed in order to achieve the IT objectives?
These enterprises also have the ability to design the solution architecture of the identified IT investment initiatives/opportunities better than those enterprises that do not succeed in managing their IT investments and generating maximum value. These explanations are based on the premise that, formulating business/organisation aligned IT strategy—that is, specifying IT objectives and identifying the right IT investment initiatives/opportunities helps to ensure that enterprises are investing in or doing the right things, and designing the solution architectures of the initiatives helps to ensure that the right things are done the right way.
The following authors helped to emphasise the importance of formulating good IT strategy to managing IT investments successfully and generating maximum value. The result of the study carried out by the duo of Paul B. Carroll and Chunka Mui, in Billion Dollar Lessons, indicated that, the reasons most of the very large investment projects fail or are written off is due to bad strategies—that is, not investing in the right investment initiatives/opportunities that will help to achieve its strategic objectives.[5] Simon More, in Strategic Project Portfolio Management, corroborated the discoveries of Paul and Chunka by stating that, ‘Organisations that outperform do so because of a combination of strong execution and great strategy.’[6] Simon further stressed that the lack of either strong execution or great strategy is the reason why enterprise investments fail.
The duo of Peter Weill and Jeanne W. Ross, also affirm the significance of designing the solution architectures of the identified IT initiatives to executing IT investment projects the right way by stating that: ‘Specifying the functionality and architectural requirements of an IT project is only the first step in generating value from IT.’[7] The duo them emphasised that, aside from specifying the functionalities and architectural requirements (i.e. designing solution architectures) that are necessary for executing the investments well, enterprises generates value from the enterprise changes that IT investment initiatives supports/enables.[8]
Explanation 3: Successful Enterprises are more adept at selecting the best things from the right things, and getting them done well
The third explanation that was given to why some enterprises are able to successfully manage their IT investments and generate maximum value while others could not, or are less able, is that, successful enterprises are more adept at selecting IT investment opportunities with the greatest potential to deliver value from a portfolio of (right) IT investment initiatives/opportunities.
These enterprises were also able to fund these investment initiative/opportunities effectively, and deliver them on time, within budget, and with the required functionalities. In addition to the ability to fund and deliver IT investment initiatives-cum-programmes/projects, these enterprises were also able to manage the business and technology changes that are provoked by the outcome of these investments,[9] why unsuccessful enterprises could not or are less able.
According to Georges Ataya, a professor at Solvay Brussels School of Economics and Management, assert that, the challenge facing enterprises today is not the lack of IT investment opportunities, but the lack of capability to select the strategic IT investment opportunities or projects with the greatest potential to generate value. [10] He also asserted that, enterprises are also faced with the challenge of executing the investments projects efficiently and effectively, so that, they can deliver their potential value.
The duo of Peter Weill and Richard Woodham corroborated explanations two (the challenges of conception or bad strategy), and three (the challenges of portfolio management and programme/project execution) above by stating that:
In recent years there have been spectacular failures of large information technology (IT) investments—major enterprise resource planning (ERP) systems initiatives that were never completed, e-business initiatives that were ill-conceived or poorly executed and new systems developed that were never used effectively.[11]
The conclusion therefore is that, enterprises that manage their IT investments successfully and generate maximum value from the investments are more adept at selecting the best things from the right things, and getting them done well.
Explanation 4: Successful Enterprises Are More Capable of Deliverying High Quality and Cost Effective IT Services
The fourth explanation that was given to why some enterprises are able to successfully manage their IT investments and generate maximum value while others could not, or are less able, is that enterprises that were successful are more capable of sourcing/provisioning the right IT services, at the right level of quality, and cost than those that could not.[12],[13]. This implies that enterprises that succeed in managing their IT investments and generating maximum value in return are more capable of delivering more value for the money they invested in IT, as well as, having more satisfied users of its IT systems/services. According to Peter Weill and Marianne Broadbent, in Leveraging the New Infrastructure, ‘Firms with more satisfied people using their systems also get more business value from their investments in information technology.’[14]
Explanation 5: Successful Enterprises Are More Adept at Performing Post Implementation Reviews and Harvesting the Expected Benefits of IT Investments in Full
The fifth and the last explanation that was given to why some enterprises are able to successfully manage their IT investments and generate maximum value while others could not, is that, enterprises that were successful usually have plan for reviewing their IT investment projects upon the completion of their implementation, and prior to their provisioning—called post implementation review (PIR). The duo of Richard Hunter and George Westerman, in The Real Business of IT, corroborated this assertion, by citing an MIT CISR survey that found ‘enterprises that do post-implementation reviews (PIRs) better than others get higher business value from IT.’[15]
These enterprises also, usually have strategies and plans for realising/harvesting the benefits of their investments in IT in full. In addition, these enterprises make specific individuals to be responsible/accountable for their successful execution, and consequently, these strategies/plans are executed effectively and efficiently. According to the duo of Marianne Broadbent and Ellen S. Kitzis, in The New CIO Leader, ‘Having a benefits-management or value realization process in place is one of the big differences between those who do and those who don’t realize value from their initiatives.’[16]
[1] Ross, J. W., & Weill, P. (2002, November). Six IT Decisions Your IT People Shouldn’t Make. Harvard Business Review, 1-10, p. 2.
[2] The Standish Group International, CHAOS Summary 2009, p.1
[3] Weill, P., & Ross, J. W. (2004). IT Governance: How Top Performers Manage IT Decision Rights for Superior Results. US: Harvard Business Press, p. 3.
[4] Ibid., p. 4.
[5] Carroll, P. B., & Mui, C. (2008). Billion-Dollar Lessons: What you Can Learn from the Most Inexcusable Business Failures of the Last 25 Years . New York: Penguin Group Inc., p. 2.
[6] Moore, S. (2010). Strategic Project Portfolio Management: Enabling a Productive Organisation . US: John Wiley & Sons, Inc.,
[7] Weill & Ross, IT Governance, p. 43.
[8] Ibid., p. 44.
[9] Milis, K., & Mercken, R. (2002). Success Factors Regarding the Implementation of ICT investment projects. International Journal of Production Economics, 106-117. p. 111.
[10] Ataya, G., & Thorp, J. (2007). Portfolio Management: Unlocking the Value of IT Investments. Information Systems Control Journal, 4, 1-2. p. 1.
[11] Weill, P., & Woodham, R. (2002, April). Dont Just Lead, Govern: Implementing Effective IT Governance. MIT Sloan School of Management Working Paper. Massachusetts Institute of Technology, p. 1.
[12] Hunter, R., & Westerman, G. (2009). The Real Business of IT: How CIOs Create and Communicate Value. US: Harvard Business Press, p. 45.
[13] Broadbent, M., & Kitzis, E. (2005). The New CIO Leader: Setting the Agenda and Delivering Results. US: Harvard Business School Press, p. 193.
[14] Weill & Broadbent, Leveraging the New Infrastructure, p. 68.
[15] Hunter & Westerman, The Real Business of IT, p. 163.
[16] Broadbent & Kitzis, The New CIO Leader, p. 139